Wells Fargo (WFC) finally appointed a new CEO to lead the bank following a six-month search effort. Charlie Scharf took the job and will start on October 21. The market was pleased, sending shares of Wells Fargo higher by about 4% today. Before taking the job, Scharf was CEO of Bank of New York Mellon (BK), a firm that Warren Buffett's Berkshire Hathaway has an 8.5% ownership stake in. Buffett upped his stake in BNY Mellon in 2017 and 2018, perhaps a vote of confidence in Scharf since he was named the bank's CEO in July 2017. The Wall Street Journal notes that Scharf "has experience with turnarounds" and was tasked with overhauling BNY Mellon. Prior to his work at the bank, Scharf was [...]

Prospect Capital (PSEC) is one of the largest and oldest business development companies, or BDCs.  All BDCs are basically middle market lenders, which means they lend to or take equity stakes in the 200,000 or so subprime businesses that generate about a third of the U.S. economy.Essentially, BDCs serve a market of small companies across the country that regular banks don’t want to touch, helping those businesses fund acquisitions, leveraged buyout transactions, recapitalizations, and growth projects.Prospect Capital's portfolio includes more than 130 investments across nearly 40 industries and nine different investment strategies. The portfolio's annualized yield exceeds 10%, reflecting its higher risk profile.

On September 25, Altria (MO) announced that merger discussions with Philip Morris (PM) ended with no deal. The environment for vaping products weakened significantly over the last month due to increased regulatory uncertainty, which likely prevented the two tobacco giants from reaching an agreement. Philip Morris's stock jumped more than 5% on the news as its shareholders were relieved the company would not expose itself to the more dynamic cigarette and vaping markets in America. However, Altria's stock finished the day slightly lower. It's hard to say why Altria's stock didn't perform better after some uncertainty was lifted. Some speculators may have bought shares in anticipation of Philip Morris paying a premium for the company and headed for the exits once no deal was [...]

This morning Philip Morris (PM) announced that merger discussions with Altria had ended without a deal. Investors responded positively to the news, lifting PM's stock price by about 5% in early trading. As we discussed earlier this month, shareholders were concerned that a merger would increase Philip Morris's risk profile by exposing the company to a more dynamic and challenging business environment in America, where cigarette volumes are declining at a faster rate. The firm's U.S. exposure would have increased from 0% to nearly 40% of net revenues, and Philip Morris would be roped into the latest regulatory drama with Juul (Altria owns a 35% stake in the controversial vaping company). Instead of combining, the companies will focus on working together to make Philip [...]